Editors' pick: Originally published July 28.
Where can can someone turn for peace as they do their best to save and prepare for retirement?
Over 10,000 baby boomers retire each day, and the majority have asked or will ask themselves how they can have a happy retirement. This will largely depend on how they prepare.
The greatest form of happiness during retirement comes from knowing money will show up monthly to cover expenses. Watching your principal deplete is stressful. To ensure the income never stops, you must have a plan in place with all your assets working in harmony.
Joshua Mellberg, president and found of J.D. Mellberg Financial says, "the key to a happy retirement is being able to do the things you love, with the people you love and not having anything stand in your way."
Mellberg continues, "Before you reach retirement age, you should already have a track record of well-thought-out investment and saving decisions. You'll need to understand not only your current expenses, but also those that are likely to occur in the future."
"Over time during your career, your income is expected to increase, which means the amount of money you are putting towards retirement should increase, as well. You'll want to look at certain options available to you, such as delaying social security benefits and purchasing annuities."
Having access to investments or programs with a proven track record is imperative. Although most retirees will have more time to manage their own money in retirement, they don't always have the experience to make wise decisions. Too many people have damaged their financial situation by trying to manage their own money after letting someone else do it for most their lives.
They will also want to search for income-producing assets and programs. Most people will be happy the rest of their lives if they always have enough money to live on. It's the market loss or disruption on growth or dividends or income that hurt the most. The 53% market loss during the great recession forced many retired Americans back to work.
There are two main financial phases in life. The first is to accumulate as much wealth as possible. The second is to live off that money or the interest, gains or dividends from that money. The happiest people will find a system that allows them to never depreciate their principal and live off the interest.
Mellberg points out, "Growth on money is good for younger individuals who are in the wealth accumulation period. As you approach retirement, it's time to shift gears from wealth accumulation to preservation mode, and income from the money becomes far more important. If you use methods that are too risky later in life, you could lose principal when you don't have the luxury of time to make it back."
So what is your plan or strategy to be happy? What is your personal plan to not run out of money? Are you focused on wealth growing or income planning? There is a major difference in planning to have money show up every month and planning to have your money grow at the highest interest rate possible.
There are many great areas for income planning such as real estate, annuities, pension plans, bridge loans or peer-to- peer lending, private notes, bonds and dividend-paying stocks. Mellberg said that by the time someone retires, they should have a strategy with a good track record, whether that is outsourced to someone or a company more capable than they are or done on their own through years of tried and tested results.
If you are not money happy and money confident at retirement age then you need to strengthen your plan or money situation before retiring. Feeling broke in retirement will surely leave you feeling unhappy. Your level of happiness leading up to retirement and during retirement will come at least partly from knowing you will always have enough to be who you want, have what you want and do what you want.